Intel ups Q4 revenue forecast; Sun 'comfortable' with orders to date

Intel Corp. this afternoon upped its revenue estimates for the fourth quarter to between $6.7 billion and $6.9 billion. The company's previous estimates had been $6.2 billion to $6.8 billion.

The forecasts are still substantially lower than last year's fourth-quarter revenue of $8.7 billion.

In a statement issued after the U.S. financial markets closed today, Intel said demand for microprocessors has been better than expected. In addition, the company said gross profit margins should be at the upper half of previous forecasts.

"The quarter is progressing at the high end of our expectations and may even exceed them," said Andy Bryant, Intel's executive vice president and chief financial officer, in a conference call with analysts this afternoon. Both Intel's business and consumer businesses are up, he added.

Bryant said demand for Pentium 4 chips continues to exceed supply, as the company ramps up production of its new generation of microprocessors. "We're doing all we can to meet customers' needs," he said. "I don't think we know yet exactly how much excess demand is out there. I do think we're a little short, and we're doing what we can to get it met."

Fears that orders would continue to soften as the economy deteriorated turned out not to have been realized, Bryant said. "Order patterns for microprocessors held in October and November. Business appears to have returned to seasonal patterns," he said.

However, Bryant added, "economic indicators remain weak. We will continue to be cautious" until the general economy shows signs of rebounding.

Intel's midquarter update will likely be warmly welcomed in an industry that has seen a string of declining forecasts and demand. In October, for example, Cambridge, Mass.-based Forrester Research Inc. conducted a survey of 209 executives at major U.S. corporations and found that 32% had cut spending on IT this year.

Also this afternoon, officials at Sun Microsystems Inc. said in a midquarter update that current revenue appears to be on track with earlier forecasts for the quarter. Sun said it is "comfortable" with its performance so far this quarter, with orders meeting internal expectations.

"Our balance sheet is in excellent shape," said Ed Zander, president and chief operating officer of Sun. "Our company is a lot stronger than it was in December of 2000."

Sun in October reported a 43% revenue drop for its first fiscal quarter compared with the same period in 2000, as the company was hit by slowing demand for servers and a lack of orders after the Sept. 11 attacks in the U.S.

Sun posted revenue of $2.86 billion for the quarter ended Sept. 30, down from $5 billion in last year's first quarter.

Jennifer DiSabatino contributed to this report.

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